Hello and welcome to this week's edition of 401k Real Talk. This is WealthManagement.com's Fred Barstein Omnichannel RPA Contributing Editor & CEO at TRAU, TPSU & 401kTV – I Review everything from the past week's stories and pick out the most relevant and interesting ones offering an open honest and candid discussion that you wouldn't get anyway. So let's get real!

After a lull in April, the labor market lit up in May adding 272,000 new jobs beating experts' expectations with education and government accounting for nearly half, while the business sector added 33,000 new positions. Unemployment rose 4% while wages rose 4.1% year over year.

So not only is the war for talent still raging in the workplace with a recent Morgan Stanley report showing how much employees value financial planning services, it's also affecting all sectors, including data custodians , TPAs ​​and advisors alike struggle to hire quality talent that impacts services. and their ability to grow as the war for talent continues.

DC lawsuits have in the past targeted fee and plan sponsors for sleeping at the wheel with TDF and forfeiture accounts, the latest victims now switching to managed accounts with a new suit by Bechtel employees, a $5.1 billion plan.

The lawsuit alleges that the recordkeeping fees, which were between $24-$29/year/participant, actually increased by over $300 due to the additional revenue paid to the provider who used the managed accounts as an investment. default of QDIA.

Citing little difference in performance from TDFs, which were significantly cheaper, and limited engagement from participants, the lawsuit claims the managed account fees were unreasonable.

While TDFs are still in their infancy and merely a stop on the road to personalization until more engagement unlocks their benefits and costs come down, it's likely that managed accounts will be a target of litigation as their use grows both by the keepers of the registers and by them and their costs. advisors to generate additional income.

Speaking of managed accounts, a NY federal court dismissed the motion to dismiss a lawsuit filed by participants in six college and university plans against their provider TIAA alleging high-pressure sales tactics to enroll participants in high-cost managed accounts. The plan's sponsors were not named.

In 2021, TIAA was fined $97 million by the SEC for their kickback sales tactics as well as managed accounts, citing failure to disclose conflicts of interest and misleading statements by TIAA representatives.

So as cross-selling by providers and advisors only increases, so does the potential for conflicts of interest and, as we've seen, lawsuits that will only make plan sponsors more reluctant to allow their vendors to provide services. extra.

After acquiring the retirement divisions of Wintrust, Huntington Bank and Truist, OneDigital announced a similar deal with Zions Bancorp located in the Southwest with plans in Washington and California. All told, the settlement includes $4.4 billion in 200 plans with 42,000 participants.

With the exception of JP Morgan, which recently expanded its relationship with Vestwell, and BofA, which owns Merrill and their record keeper, it appears that banks struggle to compete to offer retirement plans to clients. Although they have unique relationships with participants and business owners with access to a lot of data, retirement plans have yet to become a core service. So much for more offers and contracting opportunities.

As leading 401(k) record keepers gathered in DC June 4-5 for the sixth annual RPA Record Keeper Roundtable and Think Tank during the SPARK/DCIIA Public Policy Forum, Mark Alley of Alerus said “The 401(k) industry is entering its second golden age, but must overcome problems with scale and implementation.”

Topics included how to harness the explosion of small plans through wealth advisors and TPAs ​​and how to securely use data to drive initiatives, as well as leverage technology provided by emerging fintechs, third parties and through AI.

Read mine WealthManagement.com's latest column about this important meeting, which also touched on how the DC industry needs to come together to collaborate on guaranteed income, a topic that will of course be covered in more detail in June 17-18 Roundtable on Retirement Income in NYC.

So those were the top stories from last week. I listed a few others that I thought were worth reading:

Please let me know if I missed anything or if you would like to comment. Otherwise, I look forward to talking with you next week on 401k Real Talk.